Zotefoams (ZTF) H1 2024 earnings summary

Executive summary

• Record H1 revenue of £71.1m, up 10%, and profit before tax of £8.3m, up 12%; profit excluding ReZorce investment was £10.5m.

• HPP revenue rose 37% to £36.1m, exceeding Polyolefin Foams for the first time.

• Footwear growth, supported by the Nike partnership and temporary demand tailwinds, contributed to strong HPP sales.

• ReZorce advanced with Refresco as joint development partner and market trials in preparation; Shincell alliance broadened technical capabilities.

• Full-year performance outlook remained positive, with momentum entering H2.

Financial highlights

• Revenue rose 10% to £71.1m, including a £1.8m FX headwind; constant-currency growth was 13%.

• Gross margin improved 40 bps to 33.2%; operating profit increased 14% to £9.7m and profit before tax rose 12% to £8.3m.

• EBITDA was £14.6m, up 8%; basic EPS rose 12% to 12.89p and the interim dividend increased 4.4% to 2.38p.

• Cash generated from operations increased £2.6m to £8.5m; capital expenditure tripled to £8.1m.

• Net finance costs rose to £1.4m, reflecting higher debt and interest rates.

Outlook and guidance

• Full-year performance expected to be in line with market expectations, with positive momentum into H2.

• Footwear demand is expected to normalise as temporary tailwinds ease, freeing capacity for North America and Europe.

• ReZorce priorities include sterility and endurance testing followed by market trials; development is iterative and timing to market remains uncertain.

• FY capital expenditure consensus was £20m, implying higher H2 spend led by ReZorce and the second US low-pressure vessel.